Co-operative entities A draft Abstract 'Members' Shares in Co-operative Entities' was published on 30 June in UITF Information Sheet 66. It sets out for UK use the text of a draft Interpretation D8 issued by the IASB's International Financial Reporting Interpretations Committee (IFRIC). IFRIC D8 is a proposed interpretation of IAS 32, which deals with the classification of financial instruments
as liabilities or equity.

The draft Abstract addresses questions about how IAS 32's classification principles apply to financial instruments issued by co-operative and other entities that give the holder the right to request redemption. The issue of a final UK Abstract is conditional on a UK standard like IAS 32 being implemented by the ASB (see page 2). Comments are requested by 13 September.

Retirement benefits

A draft Abstract 'Retirement Benefit Schemes with a Promised Return on Contributions or Notional Contributions' was published on 16 July in Information Sheet 67. It sets out for UK use the text of IFRIC's draft Interpretation D9, clarifying the requirements of FRS 17 'Retirement Benefits'.

The draft Abstract suggests that retirement benefit schemes that promise employees a specified return on contributions should be accounted for as defined benefit schemes rather than defined contribution schemes. It then sets out proposed principles for accounting for:

• a benefit under a guarantee of a fixed return: the normal requirements for defined benefit accounting should apply (ie projecting forward the contributionsat the guaranteed rate of return, allocating the benefit to periods of service and discounting).
• a benefit that depends on future asset returns: the scheme liability should be measured at the fair value at the balance sheet date of the assets upon which the benefit is specified (ie no projection forward of the benefits should be made).
• a combination of the above: the liability relating to each component of benefit (described respectively as the fixed and variable components) should be calculated separately. Defined benefit accounting should be applied to the fixed component, and an additional liability should be recognised if the liability under the variable component is greater than the liability under the fixed component.

Comments are requested by 21 September.

Multi-employer plans

The UITF has responded to IFRIC D6 'Multi-employer Plans', a draft Interpretation of the requirements in IAS 19 'Employee Benefits' relating to employee benefit plans with more than one participating employer. D6 emphasises that IAS 19 requires individual participating employers to make every practicable effort to apply defined benefit accounting and provides guidance on how to do it.

The UITF's response expresses concern at the effect the draft Interpretation could have on certain multi-employer plans, including group plans (see page 3).

Changes in decommissioning liabilities

IFRIC 1 'Changes in Existing Decommissioning, Restoration and Similar Liabilities' was issued in May. It contains guidance on accounting for changes in the measurement of decommissioning and similar liabilities, such as liabilities to dismantle and remove assets and to restore sites, which form part of the cost of the related assets. It deals with changes in estimated cash outflows, changes in the discount rate and the unwinding of the discount, addressing the question whether such changes should be capitalised or recognised in profit or loss.

The UITF decided not to develop an equivalent UK Abstract, noting that the Interpretation is consistent with the guidance set out in the UK SORP 'Accounting for Oil and Gas Exploration, Development, Production and Decommissioning Activities'.

Draft amendment to SIC-12

IFRIC has begun to discuss issues concerning accounting for employee benefit trusts and, as a first step, has issued IFRIC Draft Amendment D7 'Scope of SIC-12 Consolidation - Special Purpose Entities'. Employee benefit trusts are presently excluded from the scope of SIC-12; the draft amendment proposes to remove the scope exclusion. In the UK, the accounting for employee benefit trusts is governed by UITF 32 'Employee
benefit trusts and other intermediate payment arrangements' and UITF 38 'Accounting for ESOP trusts'. IFRIC's draft Interpretation is in line with UK requirements.

Service concessions

IFRIC has been considering the appropriate accounting arrangements for service concession arrangements, focusing mainly on public-to-private infrastructure contracts. This has significant potential implications for the UK, in particular given the scale of Private Finance Initiative (PFI) contracts, currently accounted for under Application Note F to FRS 5 'Reporting the Substance of Transactions'. IFRIC has been discussing three possible accounting models:

• the physical asset model;
• the receivable model; and
• the intangible asset model.

IFRIC will consider a set of draft Interpretations at its July meeting, with a fuller debate to follow in September.